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Bank of England enters the crypto-currency war
Capital Markets, FinTech
It’s not only commercial banks that are fighting back against the activities of fintech disrupters. Central banks too are doing their best to counter the threat of interloper crypto-currencies.
“Computer scientists have devised a digital crypto-currency in league with the Bank of England that could pose a devastating threat to large tranches of the financial industry, and profoundly change the management of monetary policy,” reports The Telegraph.
Known as RSCoin, if successfully adopted it might hurt both the entrenched interests of commercial banks and the libertarian crypto-currencies — such as Bitcoin.
RSCoin would be a tool of state control, allowing the central bank to keep a tight grip on the money supply and respond to crises. It would erode the exorbitant privilege of commercial banks of creating money out of thin air under a fractional reserve financial system.
In addition, The Telegraph reports:
The RSCoin is deemed more likely to gain to mass acceptance than Bitcoin since the ledger would remain exclusively in the hands of the central bank, with the ‘trust’ factor of state authority. It would have the incumbency benefits of an established currency behind it.
Curious that the Bank of England is briefing media about its tech wizardry now. Just this month, the Old Lady of Threadneedle Street was forced to tell Bloomberg that its computer systems are frequently attacked by hackers probing for vulnerabilities.